A yen-pegged stablecoin traded at more than four times its reference value on Upbit on September 17, and the fallout is now driving South Korea's Financial Services Commission to review whether professional market making should be permitted in the country's digital-asset market for the first time.

JPYC, designed to hold steady at one Japanese yen per token, jumped from an opening price near 12 Korean won to 37.6 won within roughly an hour of trading starting on Upbit — one of South Korea's largest crypto exchanges. The token's yen-won reference rate at the time sat close to 8.8 won. The gap exposed how thin order books can distort prices even for assets built to track a stable real-world currency.

How much did traders lose?

The retreat came too late for thousands of buyers. According to data Upbit provided to a South Korean lawmaker, 21,219 investors purchased JPYC at prices exceeding the yen-won reference rate by more than 10% in the five days following the listing. Those purchases totaled roughly 259.9 billion won combined — a striking figure for a token marketed as a low-volatility, currency-pegged asset rather than a speculative bet.

Regulators and reporting tied the surge to a familiar dynamic in thinly traded markets: insufficient tokens changing hands to meet a rush of buying demand. As Upbit widened the networks it supported for JPYC deposits beyond Ethereum to include Kaia and Polygon, more supply reached the exchange and the price drifted back down, settling into the 8-won range the following day.

Why is the FSC reviewing market-making rules?

The FSC is weighing whether to allow licensed market makers who could keep buy and sell quotes active on both sides of the order book — a structure that could have absorbed the early demand spike before it turned into a fourfold price gap. Yoo Young-joon, the FSC's Director of Digital Finance Policy, told a conference in Seoul that the regulator "will also review the need to introduce systems such as market-making activities to increase the efficiency and stability of the digital asset landscape."

He acknowledged the political pressure the JPYC episode created, saying: "there were also criticisms that user losses occurred from the price surge after the JPYC listing, so demands for discipline in this area are expanding."

The statement stops short of an immediate policy change. Market making remains restricted under South Korea's current virtual-asset market manipulation framework. Any new structure allowing dedicated market makers would require further regulatory and legislative work before taking effect, and the FSC has not laid out specific licensing or disclosure terms. South Korean researchers had flagged this gap well before the JPYC incident, arguing that the absence of a formal market-maker system could produce pricing discrepancies and elevated volatility.

Was JPYC the only stablecoin to break its peg on Korean exchanges?

No. The same month produced a cluster of liquidity-driven dislocations across Korean venues, which is a major reason the market-making debate now feels urgent rather than theoretical:

• PayPal's PYUSD hit an all-time high of 1,760 won on Upbit on September 17 — the same day JPYC listed — before sliding back toward 1,360 won, a move News1 attributed to constrained supply in early trading.
• Circle's euro-backed EURC spiked to 7,860 won on Bithumb shortly after midnight on September 14, up more than 400% from its previous close of 1,513 won, with roughly 60% of that day's volume executed inside a 15-minute window.
• USDG reached 3,048 won on Bithumb against a prior close near 1,358 won.

None of these moves reflected a change in the underlying currencies backing the tokens. They reflected thin order books meeting sudden demand — precisely the dynamic the FSC is now studying.

Industry participants cited by News1 have proposed that won stablecoin rules require sufficient initial circulating supply before exchange trading begins, along with issuance and redemption channels that can respond as demand shifts, and mechanisms to flag or restrict trades when prices stray far from a reference value. The episode distinguishes exchange-level liquidity from reserve backing: reserves determine whether a stablecoin can be redeemed at par, but order-book depth determines whether its market price ever reflects that value in the first place.

What happens next for South Korea's digital asset framework?

The market-making review runs alongside South Korea's second-stage legislative push, the Digital Asset Basic Act, expected to cover stablecoin issuance, exchanges, disclosures and internal controls. An FSC official said the framework is expected to reach a National Assembly bill review subcommittee in November, with roughly ten digital asset and stablecoin proposals still pending.

Lawmakers have not settled core questions, including who should be allowed to issue won-denominated stablecoins. The Bank of Korea has continued to favor a bank-led structure, citing monetary policy and financial stability concerns.

For now, professional market making stays off-limits in South Korea's crypto market, and JPYC, PYUSD and EURC have all drifted back toward their reference values without any rule change. The FSC's review signals a willingness to treat exchange-level liquidity as a regulatory problem in its own right, separate from stablecoin reserves or issuer licensing — and that distinction could shape how November's legislative session handles the rest of the framework.